“Day Trader” column for December 16 – 2009

Our market certainly did not give any indication last week that it was ready just yet to move up.   Last week the All Ords closed well below the 4,700 level I mentioned in last week’s column, but all of the week’s trading was within the range of the week before so the actual setup for a move up is still in place.   When the move comes I suspect it will be swift and as yet it is not clear which stocks will lead the charge.  Again I’m still watching with patience.

I looked at charts for all the stocks on our market at the weekend and only came up with around fifty stocks ranging in price from 5¢ to the highest priced stocks that I want on my current watch list.   I will discuss some of them shortly.

Many of the top one hundred stocks and a number of other stocks I singled out over the past couple of months to keep an eye on are still in short term downtrends (that is the last three months) or have just broken the downtrend and are retesting it before what could be the beginning of the next move up.   All that said, I believe the best bets for the next move will be the stocks just breaking to new highs or consolidating just under old highs in preparation to move when the market resumes the uptrend.    In many cases the highs I am talking about are not all time highs but significant spike highs formed around twelve months ago as prices rallied before the final sell off into early this year.

Ivanhoe Australia (IVA) the one stock held at the moment continued to trade sideways last week and in the process formed a higher spike low allowing me to move its stop up to $3.88.   There was a typo in last week’s portfolio position.  The number of IVA held is 3,000 as per last week’s buy description.

Avita Medical (AVH) has been trading in a narrow band since its strong move up in August.  Last Friday it broke above this trading range to close at 19¢ on increased volume.   In a strong market this would be enough to trigger a buy for me.  But as that is not the case I will wait for it to retest the top of the trading range and form a daily pivot point before considering buying.

Murchison Metals (MMX) on Friday broke above consolidation just below $2.18, its high for this year, but as the stop would have been quite large I will wait to see what it does around that $2.18 level before making a buy decision.

A cheapie that popped its head up last week was ABM Resources (ABU) when it tested a spike high of 4.7¢ formed in September.  Again in a strong market I would consider buying it for a move up to around 6¢.   But at present I think it will be a much safer trade if it consolidates around the 6¢ to 8¢ mark from where in a move up it would have targets as high as 14¢ to 16¢.

Auroa Minerals (AND) is moving up to test the all time highs formed in February and June last year.   If it pulls back from near the 65¢ level it may then gives a safe buy signal.      

For back copies of the column goto  www.thedaytrader.com.au

Portfolio Position

Cash        $258,636

Shares     $12,000

Total        $270,636

Starting capital $50,000 in July 2006